12 June 1996 External T.I. 9602255 - APPROVED ASSOCIATION STATUS

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

Outline criteria to be met in order to receive approved association status for the purposes of 37(1)(a)(ii)(A).

Position:

Outline of requirements provided.

Reasons:

Standard information (see file #952141)

		960225
XXXXXXXXXX				C. Tremblay

Attention: XXXXXXXXXX

June 12, 1996

Dear Sirs:

Re: Approved Association Status under subparagraph 37(1)(a)(ii) of the Income Tax Act (the "Act")

This is in reply to your letter dated January 15, 1996, in which you requested information concerning the requirements necessary to determine whether an organization can be approved under subparagraph 37(1)(a)(ii) of the Act.

An association, in order to be considered "approved", must receive written approval from our Minister. In order for any organization to become an "approved association", it must meet the following criteria:

(a) it must have the facilities and personnel capable of carrying out SR&ED, as defined in the Act;

(b) it must carry on only activities that are unquestionably SR&ED;

(c) it must satisfy the requirements for non-profit status, such as no personal benefit to members, no control of other associations, satisfactory provisions for distribution of assets upon dissolution, etc.;

(d) the general public must be a beneficiary of the results of successful research; and

(e) the funding of the association must be sufficient to ensure ongoing SR&ED.

Although, there is no specific form to be filled out, we would require copies of the following documentation relating to the organization and its activities:

(1) identification of the legislation under which the association was, or is to be, created;

(2) copies of the organization's charter, code of ethics and by-laws which should indicate that it will satisfy all requirements in clause 37(1)(a)(ii)(A) of the Act and the post-amble thereto, as well as how its property will be distributed in the event of wind-up;

(3) a detailed description of the association's arrangements for obtaining funds;

(4) a detailed description of the association's arrangements for disbursing funds;

(5) financial statements for prior years, if the association already exists; and

(6) details of the research activities to be carried out by the association in the future and evidence that it has the staff and facilities to carry out such activities.

We trust our comments will be of assistance to you.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch